Unilever has agreed to sell its global tea business to CVC Capital Partners for €4.5bn (£3.8bn).
The European private equity firm saw off competition from rival investment houses Advent and Carlyle in an auction that concluded yesterday afternoon.
Unilever’s tea business, Ekaterra, is home to a portfolio of 34 brands, including PG Tips, Lipton and Pukka.
Despite being the world’s largest tea maker, with annual revenues of about €2bn, the business has been a drag on Unilever’s growth in recent years as consumers switched from traditional black teas to other hot drinks.
The sale to CVC ends a two-year long process to spin out and divest Ekaterra.
Unilever CEO Alan Jope said: “The evolution of our portfolio into higher growth spaces is an important part of our growth strategy for Unilever. Our decision to sell Ekaterra demonstrates further progress in delivering against our plans.
“We are proud of the place that our tea business has in our company’s history. We look forward to seeing Ekaterra, with its strong brands and global footprint, prosper under CVC’s ownership. I would like to thank our tea colleagues around the world for their passion and commitment to our tea business and wish them well for the future.”
The sale of Ekaterra does not include Unilever’s tea business in India, Nepal and Indonesia, as well as Unilever’s interests in the Pepsi Lipton ready-to-drink tea joint ventures and associated distribution businesses.
Unite called for urgent talks with Unilever about the sale, with the union concerned about one of the former private equity owners of Debenhams taking over the assets.
The union’s concerns centre around the PG Tips factory in Manchester.
Unite general secretary Sharon Graham said: “The story of private equity buy-outs in the UK very often has a fatal pattern of debt loading, asset stripping and job cuts as short-term shareholder dividends soar. We will not allow another case of corporate betrayal to ruin another iconic product.
“Unite will be demanding urgent meetings with management to ensure solid safeguards are in place in relation to employee job security, and their pay and conditions. We are determined that the new business has a secure future in the UK and is not further broken up for a quick profit. We will be seeking a cast iron guarantee, in particular, for the future of the Trafford Park site.”
The deal is expected to close in the second half of 2022 following regulatory approvals.
Shares in Unilever are up 0.8% to 3,853.5p so far today.
Pev Hooper, a managing partner at CVC, added: “Ekaterra is a great business, built on strong foundations of leading brands and a purpose-driven approach to its products, people and communities.
“Ekaterra is well positioned in an attractive market to accelerate its future growth, and to lead the category’s sustainable development. We look forward to working with the team to realise Ekaterra’s full potential.”
Ekaterra CEO John Davison said: “Ekaterra is a strong business with positive momentum and has an exciting future ahead under the new ownership of CVC. We look forward to the next stage of our journey as the world’s leading tea business.”
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